Best Ways to Get Fund for a startup in India

Best Ways to Get Fund for a startup in India

Any business idea needs creativity, planning, and consistency to be built and maintained. But to start a business, a reasonable amount of financial support is needed. In addition, to start up a company in India, you need to know several procedures and legal protocols. when it comes to getting your desired fund for a startup in India

Starting a new company is not an easy task, as it requires reliable partners, stakeholders, and skilled resources to pull off the system. The same thing is also applicable to service-providing companies as well. So, getting a fund for a startup in India is vital for making sure the financials are not a restrictive factor in growing your business. Usually, the startup funding is done by various investors who want to benefit from the company’s profit margins. 

Sometimes it might be challenging to find investors for startups in India, so the Indian government also helps here. Though, there are some legal procedures to it. We are here to discuss the various kinds of fund-obtaining methods for startups here in India. 

Why is funding crucial for startups?

A newly formed company that one or more founders found is defined as a startup. It generally means setting up the initial procedure or operation protocols of a founding company. Usually, these companies manufacture goods and products or sell services in the market. But such tremendous and complicated ideas require a substantial amount of money. Without a considerable amount of money in the form of startup funding, it is impossible to do so. While you may get different investors, a startup is initially funded by the founders or owners usually. Even if the source of funding is through family and friends, the investment risk is involved like any other business, plus relationships are at stake. But that is also why people prefer looking for investors for their startups.

Having a startup in India requires an understanding of some factors. Firstly, a startup needs substantial investment to start and more to modify further and develop the product or service. Secondly, in the initial business phase, there is a high risk of a business not working out properly. However, if you can establish the company and capitalize on the market, you’ll be able to earn high profits.

Finding investors for startups in India is critical to initiate the primary steps of the business with the high cost and required funds. The primary source of these investors can be the founders or their families and friends. But official investment gathering would be from crowdfunding, venture capitalists, and even getting loans. 

Factors to consider before Starting up:

  • The very first step before entering the startup eco-space is to understand the market and the demand for the product or service you are planning to offer. Thus, obtaining a fund for a startup in India becomes necessary, to ensure your backend processes are intact.
  • Secondly, starting up a company requires an office or store location, which would need rent to be paid. However, you can also perform take it online considering the post-pandemic transition.  
  • Third, comes the legalities and documents of partnerships and the startup. This is to establish a viable and legal function of joint ownership. 
  • Last but not least is obtaining the actual funding, for which one can get through several sources including friends and families. However, venture capitalists and crowdfunding are more structured and authorized methods of getting fund for a startup in India.

Advantages of building a startup in India

  • Higher Profits:

    startup in India is pretty profitable if you can capitalize on the market and utilize the open demands.  

  • Better Agility:

    A startup allows you more agility as, unlike other businesses, it is relatively a smaller team to handle. This allows you to adapt and upgrade much faster than other more prominent companies. Things like improving the business portfolio, business-operation models, or service structures become easier. 

  • Easy Risks:

    Taking chances and quicker decisions without a significant impact on the business is another advantage a startup brings in. This factor allows you to adapt quickly to market value and demand. Thus, you can provide your products and services in a customized way as much as feasible. 

  • Cost-efficiency:

    Compared to other big businesses, a start-up is more cost-efficient. While more prominent established companies have high administrative authority, startups are more efficient and manageable. This allows them to partner or collab with other small business organizations. 

  • Customization:

    A startup enables you to personalize your goods or services. This means you will be able to provide a unique experience for the customers. It is also more versatile; thus, a single employee can multitask. For example, a skilled salesperson can also act as a relationship manager. This provides more convenient customer support and builds customer relationships faster. 

  • Unlimited Learning:

    On top of that, most startups are suitable for employees as they have a higher tolerance for minor mistakes. They also support learning about the job for employees, which allows them to improve. 

Eligibility and requirements to build a startup in India 

Like every business, to startup, a business in India has some requirements. Thus, there are some eligible criteria like taxation and legal recognition to start up a company. There are a few documents and paperwork you need to do before starting up a company. 

  • For recognition, the startup should register as a partnership firm or be incorporated as a private limited company. Up to 10 years from the date of incorporation, one can consider an entity as a startup. 
  • A startup should work to improve and upgrade products and services to generate wealth and gain exposure. 
  • The first step of tax exemption is getting recognition which is discussed earlier. After that, it should be incorporated, and DPIIT recognized startup. But to begin a startup, you require some funding’s. 

Best ways for getting funds for a startup in India: 

Every business, be it big and established or small, requires money to start. A considerable amount of funding is needed in the primary steps of the company. There are several startup schemes in India, but often, it becomes difficult to obtain money for a startup. So here are some methods by which you can acquire cash for your startup. 

  • Borrowing from friends and family 

    Perhaps the most basic and easiest way of getting funds for your startup is getting financial support from friends and family. Sometimes it becomes harder to depend on loans or investors. This is an informal way of getting funds, as borrowing money from friends or family doesn’t require paperwork. But you need to repay the person after your brand is established and earning well. 

  • Taking business loans

    This method is a more formal and official way of getting funds for your startup. There are particular categories like small business loans, which are perfect for a startup. However, you need to work after this a lot and convince a bank to lend you the money. This is because banks are usually more skeptical about lending money to small businesses. However, if you meet the criteria, you might be able to get a small loan to start with.

  • Crowdfunding

    This is perhaps one of the most well-known methods of acquiring funds for a startup. Crowdfunding is the raising of money from many people, where each person donates a relatively small amount. You can capitalize on that opportunities  and promote your business ideas on social media as well. Via online medium, crowdfunding becomes even more accessible. 

  • Government funding for a startup 

    Another method is funding for startups in India by the government. The government launched Fund of Funds for Startups for this very purpose. However, there are some factors like the guidelines as per the approval of the Union Cabinet. Thus under the management of SIDBI, you can have the necessary fundings. 

  • Self-funding the startup 

    Perhaps the most independent way of funding is investing your own money for the startup. Here, the only risk you might run into is a financial loss if your business does not perform well. Other than that, there is no risk as you are not taking loans or bowing money from anyone. Thus, you don’t have to repay the debt after a specific time. The best way to do it is to stick to your current job or make little savings before the startup. 

Conclusion

Having a startup business in India is a new experience and is fun. But like any business, it requires creative ideas, management, and consistency. Your products or services should be able to connect with customers and grow the brand. But it requires funding to start and perhaps more to improve. Thus, you need to rely on small loans, crowdfunding, or Fund for a startup in India by the government to obtain the required financing. 

you can also check this out How To Start A Business In India?

So, begin with your dreams of executing your creative business idea by getting the necessary funds. There are different sources to get the required funds. Once to get the financial support, with correct planning achieving your goals will only be a matter of time. 

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